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Ramnath Goenka Vs. Amarchand and Mangaldas - Court Judgment

LegalCrystal Citation
SubjectCivil;Limitation
CourtMumbai High Court
Decided On
Case NumberO.C.J. Appeal No. 10 of 1953
Judge
Reported inAIR1954Bom208; (1953)55BOMLR980; ILR1954Bom377
ActsIndian Limitation Act, 1908 - Schedule - Articles 181, 182 and 183; Code of Civil Procedure (CPC), 1908 - Order 21, Rule 50, 50(1), 50(2), 50(3) and 50(4) - Order XXX, Rules 6 and 7
AppellantRamnath Goenka
RespondentAmarchand and Mangaldas
Appellant AdvocateM.V. Desai, Adv.
Respondent AdvocateK.T. Desai, Adv.
Excerpt:
- - desai says is perfectly true, that as far as the pay order of december 8, 1939, is concerned, there is no stay of execution provided by the court itself, nor has the court in any way postponed the enforceability of the decree against the firm. (b) against any person who has appeared in his own name, or has admitted on the pleadings that he is, or who has been adjudged to be, a partner, and (c) against any person who has been individually served as a partner with a summons and has failed to appear. i fail to see what possible difficulty can arise with regard to limitation. justice gentle would be perfectly correct. (c) against any person who has been individually served as a partner with the summons and has failed to appear.chagla, c.j.1. messrs. amarchand & mangaldas acted as attorneys for the firm of messrs. chunilal murliprasad in certain litigation, and they obtained a pay order against their clients on december 8, 1939. this pay order has the same effect as a decree; under the rules of this court a solicitor is entitled to resort to summary procedure to have his bill of costs taxed against his client and to get the judge in chambers to pass an order directing payment against his client. messrs. amarchand & mangaldas having resorted to the summary procedure obtained this order as already pointed out on december 8, 1939.on december 16, 1943, messrs. amarchand & mangaldas applied under order xxi, rule 50 of the civil procedure code, for adjudication that ram-nath goenka was a partner in the firm of messrs......
Judgment:

Chagla, C.J.

1. Messrs. Amarchand & Mangaldas acted as attorneys for the firm of Messrs. Chunilal Murliprasad in certain litigation, and they obtained a pay order against their clients on December 8, 1939. This pay order has the same effect as a decree; under the rules of this Court a solicitor is entitled to resort to summary procedure to have his bill of costs taxed against his client and to get the Judge in Chambers to pass an order directing payment against his client. Messrs. Amarchand & Mangaldas having resorted to the summary procedure obtained this order as already pointed out on December 8, 1939.

On December 16, 1943, Messrs. Amarchand & Mangaldas applied under Order XXI, Rule 50 of the Civil Procedure Code, for adjudication that Ram-nath Goenka was a partner in the firm of Messrs. Chunilal Murliprasad. This application became necessary as Ramnath Goenka had neither been served with the pay order, nor had his liability as a partner of the firm been adjudicated in those proceedings.

2. An issue was tried whether Ramnath Goenka was a partner or not. The trial Court held that he was not a partner. There was an appeal against that decision, and the Court of Appeal held on August 12, 1952, that Ramnath Goenka was a partner of the firm, and gave leave to Messrs. Amarchand & Mangaldas to execute the pay order against him. Pursuant to this order Messrs. Amarchand & Mangaldas applied for execution of the pay order on October 3, 1952. The matter came on before Mr. Justice Coyajee; and the learned Judge held that Messrs. Amarchand & Mangaldas were entitled to proceed with the execution. From that order this appeal is preferred by Ramnath Goenka.

3. The only point which has been urged before us by Mr. M. V. Desai on behalf of the appellant is that the decree or the order of December 8, 1939, is barred by limitation, and that it is not competent for Messrs. Amarchand & Mangaldas to apply to execute that decree.

4. Now, the article that applies is Article 183 of the Indian Limitation Act. That Article provides a period of limitation of twelve years when the application is to enforce the judgment, decree or order of any Court established by Royal Charter in the exercise of its ordinary original civil jurisdiction, and the time from which the limitation begins to run is when a present right to enforce the judgment, decree or order accrues to some person capable of releasing the right; and a further period of limitation is started it the the judgment, decree or order is revived.

5. The contention of Mr. M. V. Desai is that inasmuch as the decree was passed on December S, 1939, and the application for execution was made 12 years thereafter on October 3, 1952, the right to enforce the decree is barred by Article 183. It has been urged by Mr. Desai that the application to execute the decree under Order XXI, Rule 50, made on December 16, 1943, cannot operate as a revivor under Article 183, and, therefore, there was no application made by the judgment-creditors which could prevent the limitation running as provided for by Article 183.

In our opinion, Mr. Desai seems to be right on the authorities that a mere order made by an executing Court granting leave under Order XXI, Rule 50, cannot act as a revivor. It is not--to use the language of the Privy Council in -- 'Raja of Ramnad v. Velusami Tevar', AIR 1921 PC 23 (A)--'a positive order'. It is not an order which adjudicates upon the executability of the decree.

In this particular case it was sought to be argued before the Court of Appeal that the application for execution would be barred, if it was made on the date when the Court of Appeal granted leave under Order XXI, Rule 50; and, therefore, it was attempted to be contended that the Court could not grant leave, and in the judgment the Court of Appeal expressly declined to deal with the question, whether the enforceability of the pay order dated December 8, 1939, was barred by limitation or not. Therefore, all that the Court of Appeal did on August 12, 1952, was to consider whether Ramnath Goenka was a partner; and having come to the conclusion that he was a partner, the Court gave leave to the decree-holder to execute the decree against him.

6. The other and the more important questionthat arises for our consideration is whether the pay order of December 8, 1939, was enforceable ' against the appellant on December 8, 1939. It is important to note that under Art, 183 limitation, does not begin to run from the date of the judgment, decree or order passed by the High Court in the exercise of its ordinary original civil jurisdiction. The limitation only begins to run when under the decree passed by the Court the right to enforce it arises. Therefore, the point of time which is material for the purpose of Article 183 is the present right to enforce a judgment, decree or order; and the very narrow question that we have to consider in this appeal is, whether it can be said that on December 8, 1939, the judgment-creditors had the present right to enforce that order against the appellant.

7. The contention of Mr. M. V. Desai is that inasmuch as the pay order was against the firm of Messrs. Chunilal Muriiprasad, the order was against every partner of that firm inasmuch as a 'firm' is merely a compendious name of all the partners who constitute that firm, and the Court instead of mentioning the name of each partner mentioned the name of the firm and passed the decree against it; and, therefore, contends' Mr, Desai, the liability under the decree was against each of the partners of the firm of Messrs. Chunilal Muriiprasad, including the appellant; and all that the Court did, again says Mr. Desai, on August 12, 1952, was to determine the liability of Ramnath Goenka as a partner. In other words, Mr. Desai says that the effect of the order of August 12, 1952, was to determine whether the appellant was a judgment-debtor.

It is not, according to Mr. Desai, as if the right to enforce the decree was given by the order of August 12, 1952; that right had already been given by the pay order of December 8, 1939, but inasmuch as judgment-debtors were not determined, that determination took place on August 12, 1952, and the Court held that the appellant was a judgment-debtor against whom a decree was passed on December 8, 1939. But once that determination was made, the liability of the appellant was under the original decree; and, therefore, Mr. Desai says, that notwithstanding the adjudication which took place on August 12, 1952, limitation, not only against the firm but against the appellant also in respect of the decree, was running from December 8, 1939, and the right to enforce the decree became barred twelve years after that date of the decree.

8. As stated before, what we have to consider for purposes of Article 183 is not the right which is given to the judgment-creditor; nor have we to consider the liability which is imposed upon the judgment-debtor. The test laid down by the Legislature for the purposes of limitation is the present right to enforce the judgment; and if for any reason the right to enforce the judgment arises at a date subsequent to the passing of the decree, then limitation would begin to run from that date. It cannot be disputed that a Court may provide by the decree itself that the right to execute the decree shall arise, not when the decree is passed, but at a subsequent date. It may also provide that one of the several judgment-debtors might become liable to pay the decree at a future date. In such cases, it is not disputed that limitation would begin to run from the date of the enforceability provided under the decree itself.

9. What Mr. Desai says is perfectly true, that as far as the pay order of December 8, 1939, is concerned, there is no stay of execution provided by the Court itself, nor has the Court in any way postponed the enforceability of the decree against the firm. If the decree were to be considered apart from any other provisions of law, the judgment-creditor would have the right to enforce that decree against the firm and against every partner of that firm. But we cannot read the decree divorced from provisions of the law which apply to a decree passed against a firm; and, therefore, we must turn to the provisions of Order XXI, Rule 50, to consider what is in law the position Of the decree passed against the firm.

10. Sub-rule (1) of Rule 50 provides that a decree against a firm may be executed against (a) any property of the partnership; (b) against any person who has appeared in his own name, or has admitted on the pleadings that he is, or who has been adjudged to be, a partner, and (c) against any person who has been individually served as a partner with a summons and has failed to appear. Now, the appellant Ramnath Goenka does not fall either under Sub-clause (b) or (c) of Sub-rule (1) of Rule 50. Then comes Sub-rule (2) of Rule 50, Order XXI:

'Where the decree-holder claims to be entitled to cause the decree to be executed against any person other than such a person as is referred to in Sub-rule (1), Clauses (b) and (c), as being a partner in the firm, he may apply to the Court which passed the decree for leave, and where the liability is not disputed, such Court may grant such leave, or, where such liability is disputed., may order that the liability of such person be tried and determined in any manner in which any issue in a suit may be tried and determined.'

Sub-rule (3) says:

'Where the liability of any person has been tried and determined under Sub-rule (2), the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.'

Sub-rule (4) of Rule 50 says:

'Save as against any property of the partnership, a decree against a firm shall not release, render liable or otherwise affect any partner therein unless he has been served with a summons to appear and answer.'

11. Therefore, as far as the appellant was concerned the decree could not be enforced unless the Court granted leave after determining the liability of the appellant as a partner of the firm. In other words, the Civil Procedure Code provides for a statutory stay of a decree passed against a firm in respect of a person with regard to whom a claim is made by the judgment-creditor that he is a partner of the firm, where such person does not fall under Sub-clauses, (b) and (c) of Sub-rule (1) of Rule 50, Order XXI. In other words, although the decree was passed on December 8, 1939, and although it was enforceable against any property of the firm, it was not enforceable against the appellant till leave was granted on August 12, 1952. It cannot, therefore, be said that on December 8, 1939, the respondents had a present right to enforce the decree against the firm appellant.

The enforceability of the decree of December 8, 1939, against the appellant depended upon the order passed by the Court of Appeal on August 12, 1952. Without that order being passed, the order of December 8, 1939, could not be enforced against the appellant. And, therefore again turning to Article 183, the right of the judgment-creditor to enforce the order of December 8, 1939. against the appellant only arose on August 12, 1952; and it is this judgment which is sought to be executed by the application made on October 3, 1952; and it is in respect of this judgment that the question arises whether it is barred by limitation under Article 183. As the judgment can only be enforced from August 12, 1952, no question of limitation under Article 183 can possibly arise.

12. Mr. Desai has relied upon certain decisions, and he has relied most strongly upon a judgment of the Calcutta High Court reported in -- 'Jagannath Jugalkishore v. Chimanlal Chaudhuri', AIR 1949 Cal 113, (B). The real question that arose for the decision of the High Court in that case was whether an application for leave under Order XXI, Rule 50, Sub-rule (2), was governed by Article 181 or 183 of the Limitation Act; and the Court came to the conclusion that it was governed by Article 183, and not by Article 181 of the Limitation Act. The reasoning of the Court was that an application for leave under Order XXI, Rule 50, Sub-rule (2) was an application for execution and the leave sought was ancillary to the main relief. But there-are certain observations both in the judgment of Mr. Justice McNair and Mr. Justice Gentle which undoubtedly help Mr. Desai.

13. Mr. Justice McNair points out at pp. 115, 116 of the report that :

'Again, it has been argued that limitation would not begin to run against a partner who does not come under Rule 50(1), and (c), until the enquiry under Rule 50(2) is completed ...... on the ground that no 'present right to enforce the judgment, decree or order accrues' until the respondent to the application is adjudged a partner. Such a construction appears to me to confuse the right to enforce, with the procedure of enforcement. The moment the decree is passed it can be executed, but, as a matter of procedure, the persons against whom execution-should issue may remain to be determined.'

Now, with respect to the learned Judge the right under the decree was undoubtedly conferred upon the judgment-creditor when the decree was passed. But the right to enforce 'in praesenti' did not arise until the result of the enquiry and the adjudication of the liability; and what is more material and relevant for consideration to decide whether an application under Article 183 is barred or not, is not the right given under the decree, but the enforceability of that decree.

The learned Judge suggests that this is a question of procedure, and not a question of substance, but whether a decree is enforceable or not is always a question of procedure. The substantive right given under the decree is one thing, and the procedure which gives a right to enforce, it is another thing. But Article 183 is more concerned with the procedure than with the substantive right given under the decree; and if under the procedure of the land, a particular decree is not enforceable, then it cannot be said that limitation begins to run with regard to that decree, although the right to enforce it has not arisen.

14. Then Mr. Justice McNair is troubled with the question of limitation. He suggests that there may be a different limitation with regard to-a particular partner who has been adjudged to be a partner of the firm. I fail to see what possible difficulty can arise with regard to limitation. As we have already pointed out, where a Court passes a decree under which execution with regard to particular judgment-debtor is postponed, the same question of limitation would arise.

15. In connection with limitation, Mr. Desai has raised another point, that if our view were to be accepted and that the right to enforse the decree against the partner adjudged tinder Order XXI, Rule 50, Sub-rule (2), could arise only on adjudication, then the application under Order XXI, Rule 50, could be made at any time after the decree was passed and such application would never be barred. In our opinion that is not the correct position. Not only must there be a right to enforce the decree in the judgment-creditor, but there must also be a liability under the decree against the judgment-debtor; and if a decree against a firm was barred by limitation, and no application was made and there was no reviver under Article 183, then, it is difficult to understand how an application under Order XXI, Rule 50, can be made for adjudication of a particular person as a partner when the firm itself would not be liable.

16. Mr. Justice Gentle at page 119 of the report says:

'..An application by a decree-holder under Rule 50 (2) is not for any right which was not given to him by the decree but for a determination that the person against whom the application is made is a person against whom, the decree was passed and who has been liable upon it from its inception.'

Again, with great respect, the misconception is with regard to the language used in Article 183. If Article 183 spoke of the right and not the right to enforce, then Mr. Justice Gentle would be perfectly correct. Undoubtedly, the right against the firm was given to the judgment-creditor under the decree, but the right to enforce it is something very different which was statutorily postponed till certain condition laid down by the Civil Procedure Code was complied with.

17. The other decision which has been referred to at the bar is a judgment of this Court reported in --'Bhagvan v. Hiraji', AIR 1932 Bom 516 (C). That is a judgment of Mr. Justice Patkar & Mr. Justice Murphy; & what was held there was that an application for execution under Order XXI, Rule 50, is governed by Article 182 of the Indian Limitation Act; and the Court also held that such an application may be made so long as the decree against the firm is alive. As we have already pointed out the principle enunciated by Mr. Justice Patkar in his judgment is, with respect, correct, because if there is no liability upon the firm itself, then it would not be competent to the judgment-creditor to apply under Order XXI, Rule 50, for the adjudication of the liability of a partner of that firm.

There is one observation of the learned Judge at page 519 of the report which supports the view that we have taken that

'unless leave is granted (under Order XXI, Rule 50',) the decree does not become an executable decree, personally against the partners who were not served.'

18. Mr. Desai has drawn our attention to the form of the application for execution; and ho has pointed out that in the column in which the date of the decree has to be mentioned, the date of the decree is given as December 8, 1939. Now, strictly speaking, we think that the judgment-creditor should have mentioned both--the date of the decree dated December 8, 1939, and also the date of the order dated August 12, 1952, which made it possible for him to enforce the decree against the appellant. But this is merely a technical error; and as a matter of fact in other columns this order of August 12, 1952, is mentioned and relied upon. In our opinion this error would not invalidate the application for execution.

19. The result is that the appeal fails and is dismissed with costs.

Shah, J.

20. J agree with the order proposed by my Lord the Chief Justice. I desire shortly to state my reasons in view of the importance of the question involved in this appeal.

21. When in a suit a firm is impleaded as a defendant, the firm so impleaded is nothing more than a compendious name for all the partners who constitute that firm, and when a decree is passed against the firm, the decree declares the liability of all persons who were partners of the firm when the cause of action for the suit arose. A decree against a firm, in the absence of any reservation made therein or by the provisions of any law, can be enforced against the partners of the firm, not only to the extent of the property belonging to that firm, but also against them personally. Order XXI, Rule 50 of the Civil Procedure Code, provides the procedure for enforcement of a decree passed against a firm.

22. Sub-rule (1) of Rule 50 provides:

'Where a decree has been passed against a firm, execution may be granted--

(a) against any property of the partnership;

(b) against any person who has appeared in his own name under Rule 6 or Rule 7 of Order XXX or who has admitted on the pleadings that he is, or who has been adjudged to be, a partner;

(c) against any person who has been individually served as a partner with the summons and has failed to appear.'

There is a proviso to this Sub-rule, but it has no bearing on the point to be decided in this appeal.

23. Where a decree is sought to be executed against the person, who does not fall within Sub-clauses (b) and (c) of Sub-rule (1) of Rule 50, on the allegation that he is liable to satisfy the decree personally as a partner of the firm, the decree-holder is required by Sub-rule (2) to make an application for leave to execute the decree against such person, and the decree can only be executed against him provided the Court grants leave to execute the same. Even though, therefore, a decree passed against a firm declares the liability of all the partners of the firm, and but for the procedural law the decree may be immediately enforced against all persons who may be proved in execution proceedings to be partners, by reason of the provisions of Order XXI, Rule 50, that decree can be enforced against persons other than those who have appeared as partners of the firm or those who have admitted that they are partners, or those who have not appeared before the Court in the trial of the suit after being served as partners only if leave of the Court is obtained under Sub-rule (2) of Rule 50.

24. In the present case the pay order which is capable of being executed as a decree was made on December 8, 1939, 'ex parte' against the firm-of Messrs. Chunilal Murliprasad. There is no evidence that the appellant Bamnath Goenka was served with the summons or that he admitted that he was a partner of the firm of Messrs. Chunilal Murliprasad. The pay order, therefore, could not be enforced against the appellant until the Court granted leave under Order XXI, Rule 50(2) of the Civil Procedure Code. An order granting leave to enforce the pay order was made only on August 12. 1952. It is urged by counsel for the appellant that even though no leave was granted till August 12, 1952, the enforcement of the pay order against the appellant is barred by the law of limitation, because no application for execution was filed within 12 years of the date thereof.

The respondents contend that the period of limitation prescribed by Article 133 of the Indian Limitation Act for enforcement of the pay order began to run only when leave was granted under Order XXI, Rule 50(2) of the Civil Procedure Code; and alternatively they contend that there has been a 'revivor' within the meaning of Article 183, by reason of the order passed on August 12, 1952. There is no substance in the contention that there was a 'revivor' of the pay order by the order dated August 12, 1952, because when the Court granted leave to the respondents to enforce the pay order, the question whether the pay order was executable was expressly kept open. Such an order does not decide either expressly or impliedly that the decree is capable of execution, and cannot, therefore, operate as a revivor.

25. Article 183 of the Limitation Act which prescribes a period of 12 years for enforcement of judgments, decrees or orders of a Chartered High Court, in the exercise of its ordinary original civil jurisdiction, provides that the time from which the period begins to run is 'when a present right to enforce the judgment, decree or order accrues to some person capable of releasing the right.' There is a proviso under which the period of 12 years prescribed under the article can be extended. But apart from the plea of revivor which has already been dealt with no part of the proviso has been relied upon by the respondents as extending the period.

The third column of Article 133 contemplates that for the period of 12 years to begin to run not only must there be a judgment, decree or order, which declares a right which is enforceable, but that right must be enforceable 'in praesenti'. Unless, therefore, both the conditions laid down in Article 183 are fulfilled, the period of limitation prescribed by that article does not begin to run. When a decree is passed against a firm, by its own operation the decree declares the right to enforce it, and a present tight to enforce it against the firm and against the partners of the firm to the extent permissible under Rule 50(1) accrues from the date of the decree. But where a decree is sought to be enforced personally against a partner who does not fall within Clauses (b) and (c) of Order XXI, Rule 50, Sub-rule (1), there is no 'present right' to enforce the decree against such partner, unless leave of the Court is obtained under Sub-rule (2).

26. In this case a 'present right' to enforce the pay order against the appellant did not accrue merely by the pay order made against the firm of which he is now held to be a partner. The respondents had to apply under Order XXI, Rule 50 Sub-rule (2), for leave to execute the pay order against the appellant, and only when leave was granted the respondents acquired a 'present right' to enforce the same. In my view a decree-holder acquires a 'present right' to enforce the decree personally against a person other than the one described in Sub-clauses, (b) and (c) of Sub-rule (1) of Rule 50 of Order XXI. only when such a parson is adjudged a partner and leave is granted under Sub-rule (2) of Rule 50 to execute the decree against him.

27. In support of his right that there is apresent right to enforce the decree against a person not falling within Clauses. (b) and (c) of Rule 50(1), Order XXI, before leave is granted under Rule 50(2), Mr. Desai very strongly relied upon certain observations of the Calcutta High Court in a case reported in -- 'AIR 1949 Cal 113 (B)'. It is true that there are observations at pages 115 and 119 of the report which apparently support the contention advanced by Mr. M. V. Desai. It has, however, to be noted that the only point which the Court was called upon to consider in that case was, whether an application under Order XXI, Rule 50, Sub-rule (2) of the Civil Procedure Code, was governed by Article 181 or 183 of the Limitation Act; and the Court held 'that such an application was governed by the latter article. The Court was not called upon to consider whether, if Article 183 applied, the application filed by the applicant in that case was within the period prescribed by Article 183.

The decree in that case was passed on May 15, 1931, and an application for execution of the decree and an application under Order XXI, Rule 50(2) of the Civil Procedure Code, were filed on May 5, 1943, that is within 12 years from the date on which the decree was passed; and the Court therefore did not consider whether on May 5, 1843, there was a 'present right' to enforce the decree within the meaning of Article 183 of the Limitation Act. The Court in that case dealt with the meaning of the expression 'right to enforce the judgment', and did not deal with the question whether there was a 'present right' to enforce the judgment, and the observations made by the learned Judges in that case cannot be divorced from their contest to support a contention, which they were not called upon to decide.

28. Counsel for the appellant urged that the view taken by us would enable a decree-holder to postpone indefinitely the filing of an application for enforcement of a decree personally against a partner who has not appeared as a partner or who has not been adjudged a partner; and he submitted that the Legislature could not have contemplated that even after the right to execute the decree against the firm was barred, the decree-holder would be entitled to enforce the personal liability of the partners who have been adjudged partners in execution proceedings. In my judgment, the view that we are taking does not involve any such consequence.

The liability of a partner to be proceeded against either under Sub-rule (1) or Sub-rule (2) of Rule 50 only enures so long as the decree remains enforceable. An application for leave under Rule 50(2) is ancillary to an application for execution of the decree against the firm and' therefore such an application can lie only so long as an application for execution is not barred. Once the execution of the decree against the firm is barred, no application for leave under Sub-rule (2) of Rule 50 can be filed.

29. I agree, therefore, with the order proposed by my Lord the Chief Justice.

30. For curiam. The result is that the appeal fails and is dismissed with costs. Liberty to the respondents' attorneys to withdraw the amount of Rs. 500 deposited by the appellant in Court. and to apply it for part satisfaction of their costs.

31. Appeal dismissed.


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